For the 2020 tax year, the Canada Revenue Agency (CRA) has released new requirements regarding employment income reported on the T4 Slip, Statement of Remuneration Paid. This requirement is for all employers.
- If you were with Wave all year, or only used Wave to process payroll this year
- If you joined Wave mid-year and had paid your employees outside of Wave prior to joining
- If you are new to Wave now and had paid employees in those periods
In addition to reporting employment income for your employee(s) in Box 14 (employment income) of their T4 Slip, you will also be required to report their employment income for four specific dated periods using new codes in the "Other Information" area of the T4. This is only for the 2020 tax year.
The codes and dated periods correspond as follows:
- Code 57: Employment income – March 15 to May 9
- Code 58: Employment income – May 10 to July 4
- Code 59: Employment income – July 5 to August 29
- Code 60: Employment income – August 30 to September 26
The employment income reported is based on the pay date that your employee(s) received their income from you.
For example, if you are reporting employment income for the period of April 25 to May 8, and paid it to your employee on a pay date of May 14, you would report it using code 58 (May 10 - July 4).
Why is this new requirement being introduced?
Having the employment income separated for the specific periods listed will assist the CRA to cross-reference any income your employee(s) may have received through the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Response Benefit (CERB), and/or the Canada Emergency Student Benefit (CESB) as a means of validating any received relief benefits.
Will there be any other new T4 requirements?
At this point, we are not expecting any further changes to T4 reporting requirements.
How is Wave handling this?
If you were with Wave all year, or only used Wave to process payroll this year
Wave will be able to allocate your employees' employment income into those periods with the appropriate T4 code based on the pay date recorded in Wave.
If you joined Wave mid-year and had paid your employees outside of Wave prior to joining
If you joined Wave after March 15, 2020 (which is after the specific reporting periods began) and entered a Payroll History Import prior to running payrolls within Wave, you will be prompted to re-enter your Payroll History by the specific COVID-19 reporting periods.
You will be able to view your original Payroll History Import but once you enter the broken down version of it into the new reporting periods, the original History will disappear. The periods available to you will end on the first pay date recorded in Wave.
You will have to record employment income for each employee in each period, based on the cheque date your employee(s) received that income.
If you are prompted to re-enter your Payroll History but didn't have pay dates before Wave that fell into the new reporting periods - not to worry. You can re-enter your History into the time period prior the T4 required ones (January 1, 2020 - March 14, 2020). As always, ensure your entries match your records for the year to avoid issue with CRA down the line.
If you are new to Wave now and paid employees in those periods
Not a problem! When entering your Payroll History, Wave will ask for your last cheque date and the last day of the pay period you ran outside of Wave.
You will then be required to fill out each reporting period. You will have to record this income per employee based on the pay date the employee received that income.